The Federal Home Loan Mortgage Corporation (FHLMC), more popularly known as Freddie Mac, reported a slight increase in average 30-year fixed rate mortgage interest rates.
The Federal Home Loan Mortgage Corporation (FHLMC), more popularly known as Freddie Mac, reported a slight increase in average 30-year fixed rate mortgage interest rates. Freddie Mac conducts this weekly survey on home mortgage loans to provide borrowers with an idea of how affordable home loans are.
After holding steady at 3.53% for the past few weeks, the average 30-year fixed interest rate rose to 3.56% recently. This puts the rate a quarter percentage point higher than its previous lows in 2012. Meanwhile, the average 15-year fixed rate mortgage interest rate stayed at 2.77%. As for ARM loans or adjustable rate mortgages, the starting rates were flat to slightly higher, depending on the duration of the fixed interest rate period. Under the ARM type of loan, the mortgage rate is fixed for the specified number of years, after which the applicable home loan rate is adjusted depending on current market rates at the time of the reset.
On the one hand, higher mortgage rates are spurring activity in the housing sector as these push home prices up. Real estate websites are reporting that a significant number of of U.S. homeowners were freed from negative equity last year as their mortgages are now at par or cheaper than the actual value of their home properties.
However, higher interest rates are also dampening housing demand as borrowers are faced with stricter credit conditions. The recently released FOMC meeting minutes from the Federal Reserve revealed that the central bank was considering tapering off its asset purchases, which suggests higher interest rates and tighter monetary policy. This could lead to a further increase in home mortgage rates, which would make loans less affordable for home buyers.
Freddie Mac also surveys lenders on how much borrowers are willing to pay in upfront fees. The latest report shows that borrowers would have paid an average of 0.8% of the total loan amount in fees and discount points to the lenders.